Federal Register / Vol. 88, No. 222 / Monday, November 20, 2023 / Notices 80793 

21See id. 

22See id. 

23See id. 

24See id. 

25See Securities Exchange Act Release No. 65256 

(September 2, 2011), 76 FR 55969, at 55972 

(September 9, 2011) (SR–C2–2011–008) (Order 

approving proposed rule change to establish a pilot 

program to list and trade SPXPM options on the C2 

Options Exchange, Incorporated). 

26See e.g., ISE Pilot Approval; Securities 

Exchange Act Release Nos. 98451 (September 20, 

2023), 88 FR 66088 (September 26, 2023) (SR–Phlx– 

203–07) (Order approving a nonstandard 

expirations pilot program and p.m.-settled XND 

options) and 98454 (September 20, 2023), 88 FR 

66103 at 66103–04 (September 26, 2023) (SR– 

CBOE–2023–005)(Order approving p.m.-settled 

Third Friday SPX options). 

27See e.g., ISE Pilot Approval, 88 FR at 66114. 

28See id. 

29See supra note 19. In addition, the Commission 

previously approved a pilot program permitting the 

listing and trading of Third Friday NDX options on 

Nasdaq PHLX LLC (‘‘Phlx’’). See Securities 

Exchange Act Release No. 81293 (August 2, 2017), 

82 FR 37138 (August 8, 2017) (approving SR–Phlx– 

2017–04). Phlx did not list any options under the 

program and subsequently removed the rule from 

its rule book. See Securities Exchange Act Release 

No. 87517 (November 13, 2019), 84 FR 63910 

(November 19, 2019) (SR–Phlx–2019–49). 

30See supra note 24 and accompanying text. 

31 15 U.S.C. 78f(b)(5). 

32 15 U.S.C. 78s(b)(2). 

33 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release Nos. 98148 

(August 16, 2023), 88 FR 57150 (SR–NYSE–2023– 

29); 98149 (August 16, 2023), 88 FR 57154 (SR– 

NYSEAMER–2023–39); 98150 (August 16, 2023), 88 

FR 57142 (SR–NYSEArca–2023–53); 98151 (August 

16, 2023), 88 FR 57159 (SR–NYSECHX–2023–16). 4See Securities Exchange Act Release No. 98171 

(August 21, 2023), 88 FR 58364 (SR–NYSENAT– 

2023–18). Each proposal is referred to as the 

‘‘Notice’’ and for ease of reference, page citations 

are to the Notice for NYSE–2023–29. 5Notice, supra note 3, at 57150. For purposes of 

each Exchange’s colocation services, a ‘‘User’’ 

Continued 

further believes that listing Third Friday 

NDXP would not have any adverse 

effects or impact on market volatility 

and the operation of fair and orderly 

markets on the underlying cash market 

at or near the close of trading in its 

Nasdaq–100 Index options.21 Further, 

the Exchange states it does not believe 

that any market disruptions will be 

encountered with the introduction of 

Nasdaq–100 Index options with thirdFriday-of-the-month expiration dates.22

The Exchange states it will monitor for 

any such disruptions or the 

development of any factors that could 

cause such disruptions.23 Finally, the 

Exchange represents it has sufficient 

capacity to handle additional traffic 

associated with listing Third Friday 

NDXP options and that it has in place 

adequate surveillance procedures to 

monitor trading in Third Friday NDXP 

options.24

The Commission has had concerns 

about the adverse effects and impact of 

p.m.- settlement upon market volatility 

and the operation of fair and orderly 

markets on the underlying cash market 

at or near the close of trading on 

expiration days.25 However, the 

Commission recently approved 

proposals from several exchanges, 

including the Exchange, to permanently 

establish programs permitting the listing 

and trading of certain p.m.-settled 

broad-based index options.26 In 

approving these proposals, the 

Commission reviewed data provided by 

the exchanges in their filings, the 

exchanges’ pilot data and reports, as 

well as an analysis conducted at the 

direction of Staff from the Commission’s 

Division of Economic and Risk Analysis 

and concluded that analysis of the pilot 

data did not identify any significant 

economic impact on the underlying 

component securities surrounding the 

close as a result of expiring p.m.-settled 

options nor did it indicate a 

deterioration in market quality for an 

existing product when a new p.m.- 

settled expiration was introduced.27

Further, the Commission stated that 

significant changes in closing 

procedures in the decades since index 

options moved to a.m. settlement may 

also serve to mitigate the potential 

impact of p.m.-settled index options on 

the underlying cash markets.28

As noted above, the Exchange 

currently may trade Third Friday NQX 

options in addition to p.m.-settled NDX 

option with nonstandard expirations.29

The Exchange’s proposal, which would 

permit p.m.-settled Third Friday NDX, 

is reasonably designed as a limited 

expansion of existing p.m.-settled 

broad-based index option programs and 

may provide the investing public and 

other market participants more 

flexibility to closely tailor their 

investment and hedging decisions. The 

Exchange has represented that it has an 

adequate surveillance program in place 

to monitor trading in the Third Friday 

NDXP options and has the necessary 

systems capacity to support the new 

options series.30 The Commission 

expects the Exchange to continue to 

monitor any potential risks from large 

p.m.-settled positions and take 

appropriate action on a timely basis if 

warranted. 

Accordingly, the Commission finds 

that the proposed rule change is 

consistent with Section 6(b)(5) of the 

Act 31 and the rules and regulations 

thereunder applicable to a national 

securities exchange. 

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,32 that the 

proposed rule change (SR–ISE–2023–20) 

be, and hereby is, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.33

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2023–25547 Filed 11–17–23; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–98937; File Nos. SR–NYSE– 

2023–29, SR–NYSEAMER–2023–39, SR– 

NYSEArca–2023–53, SR–NYSECHX–2023– 

16, SR–NYSENAT–2023–18] 

Self-Regulatory Organizations; New 

York Stock Exchange LLC; NYSE 

American LLC; NYSEArca, Inc.; NYSE 

Chicago, Inc.; NYSE National, Inc.; 

Order Approving Proposed Rule 

Changes To Establish Certain 

Alternative Procedures for the 

Allocation of Power in Co-Location 

November 14, 2023. 

I. Introduction 

On August 3, 2023, New York Stock 

Exchange LLC, NYSE American LLC, 

NYSEArca, Inc., and NYSE Chicago, Inc. 

(the ‘‘Exchanges’’) each filed with the 

Securities and Exchange Commission 

(‘‘Commission’’), pursuant to section 

19(b)(1) of the Securities Exchange Act 

of 1934 (‘‘Act’’) 1 and Rule 19b–4 

thereunder,2 a proposal to amend its 

connectivity fee schedule to include an 

alternative procedure to allocate power 

in the Mahwah Data Center based on 

deposit-guaranteed orders from 

colocation Users in certain 

circumstances. On August 17, 2023, 

NYSE National, Inc., filed with the 

Commission the same proposed 

amendments to its connectivity fee 

schedule. The proposed rule changes 

were published for comment in the 

Federal Register on August 22, 2023 3

and August 25, 2023.4 The Commission 

received no comments on the proposed 

rule changes. This order grants approval 

of the proposed rule changes. 

II. Description of the Proposed Rule 

Changes 

A. Background 

As more fully set forth in the Notice, 

the Exchanges represent that in recent 

years they have experienced 

‘‘unprecedented’’ demand from 

colocation Users for cabinet space and 

power at the Mahwah Data Center 

(‘‘MDC’’).5 The Exchanges filed, and the 


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means any market participant that requests to 

receive colocation services directly from the 

Exchange. Id. at 57150 n. 5. 

6 Id. See Securities Exchange Act Release No. 

90732 (December 18, 2020), 85 FR 84443 (December 

28, 2020) (SR–NYSE–2020–73, SR–NYSEAMER– 

2020–66, SR–NYSEArca–2020–82, SR–NYSECHX– 

2020–26, and SR–NYSENAT–2020–28) (Notice of 

Filings of Amendment No. 1 and Order Granting 

Approval of Proposed Rule Changes, Each as 

Modified by Amendment No. 1, Amending the 

Exchanges’ Co-Location Services To Establish 

Procedures for the Allocation of Cabinets to CoLocated Users if Cabinet Inventory Falls Below 

Certain Thresholds). See Securities Exchange Act 

Release No. 91515 (April 8, 2021), 86 FR 19674 

(April 14, 2021) (SR–NYSE–2021–12, SR– 

NYSEAMER–2021–08, SR–NYSEArca–2021–11, 

SR–NYSECHX–2021–02, SR–NYSENAT–2021–03) 

(Notice of Filing of Amendment Nos. 1 and 2 and 

Order Granting Accelerated Approval of Proposed 

Rule Changes, Each as Modified by Amendment 

Nos. 1 and 2, to Establish Procedures for the 

Allocation of Power in Co-Location When 

Availability Falls Below Certain Thresholds). See 

Colocation Notes 6 and 7 in the Exchanges’ 

Connectivity Fee Schedule, available at https://

www.nyse.com/publicdocs/Wireless_Connectivity_

Fees_and_Charges.pdf. 

7See Colocation Note 6b in each Exchange’s 

Connectivity Fee Schedule. Cabinet space is offered 

in the form of dedicated cabinet, which come with 

4 to 8 kW of power, and partial cabinets, available 

in increments of eight-rack units of space, which 

may be allocated 1 or 2 kW of power. 

8See Colocation Note 7b in each Exchange’s 

Connectivity Fee Schedule. If only the Cabinet 

Limit is reached, pursuant to Colocation Note 7a, 

a Cabinet Waitlist is created. See Colocation Note 

7a in each Exchange’s Connectivity Fee Schedule. 

9See Colocation Note 7b in each Exchange’s 

Connectivity Fee Schedule. 

10Notice, supra note 3, at 57150. The Exchanges 

represent that the Combined Waitlist includes 27 

Users requesting in excess of an additional 700 kW 

of power Id. at 57151. 

11 Id. 

12 Id. 

13An ‘‘Affiliate’’ of a User is defined as ‘‘any 

other User or Hosted Customer that is under 50% 

or greater common ownership or control of the first 

User.’’ See Connectivity Fee Schedule, at 1. 

14Notice, supra note 3, at 57151. 

15 Id. 

16 Id. 

17 Id. 

18 Id. 

19See Notice, supra note 3, at 57153. 

20 Id. at 57152. 

21Notice, supra note 3, at 57151. 

22 Id. 

23 Id. 

24 Id. 

25 Id. 

26 Id. at 57151 n.10. 

27 Id. The Exchanges state that the required 

deposit would be calculated as the number of 

kilowatts ordered by the User in its Ordering 

Window order, multiplied by the appropriate ‘‘Per 

kW Monthly Fee’’ as indicated in the Connectivity 

Fee Schedule. The Per kW Monthly Fee is a factor 

of the total number of kilowatts allocated to all of 

a User’s dedicated cabinets and varies based on the 

total kilowatts allocated to a User. See Notice, supra 

note 3, at 57151 n.11. 

28Notice, supra note 3, at 57152. 

Commission approved, rules 

establishing purchasing limits and 

waitlists for cabinet space and power 

orders when supply is limited.6

Pursuant to these rules, if available 

cabinet inventory and/or power fall 

below certain thresholds, certain 

purchasing limits on cabinets and 

power apply (‘‘Cabinet and Power 

Purchasing Limits’’), including that a 

User may not purchase more than 32 

kW of power and four dedicated 

cabinets.7 If the amount of available 

power is zero, or if a User requests an 

amount of power that, if provided, 

would cause the amount of available 

power to be zero, the Exchanges place 

orders on a waitlist (‘‘Combined 

Waitlist’’).8 Orders on the Combined 

Waitlist are subject to the Cabinet and 

Power Purchasing Limits.9 The 

Exchanges represent that a Combined 

Waitlist is in effect. 

The Exchanges represent that 

although they expanded the amount of 

cabinet space and power available in the 

MDC in 2021 and 2022 by opening new 

colocation Hall 4, User demand for 

power continues to increase.10 The 

Exchanges are currently building a new 

colocation hall (‘‘Hall 5’’) to satisfy this 

increased demand.11 The Exchanges are 

also evaluating whether there is 

sufficient customer demand for 

additional power for it to invest in 

additional expansion.12

The Exchanges state that the current 

Combined Waitlist is inadequate to 

determine total demand for power 

because when the Combined Waitlist is 

in effect, current rules permit the 

Exchanges to accept one order at a time 

from a User and its Affiliates 13 of at 

most 32 kW of power.14 The Exchanges 

represent that the approximately 700 

kW of demand on the current Combined 

Waitlist may represent a ‘‘mere fraction 

of User’s true power requirements.’’ 15

The Exchanges state that several Users 

on the current Combined Waitlist have 

expressed interest in purchasing more 

than 32 kW of power, specifically 

additional power of ‘‘several hundred 

kilowatts.’’ 16 The Exchanges seek better 

knowledge of User demand for power, 

and also state that their current rules 

regarding waitlist procedures are not 

well-tailored to allocating large amounts 

of power that become available all at 

once (e.g., a new colocation hall 

opens).17 Although there is a 32 kW 

limit on orders when less than 350 kW 

of unallocated power is available, any 

time that more than 350 kW of 

unallocated power is available (i.e., the 

Combined Waitlist is not in effect), 

current rules permit Users to place 

unlimited orders that the Exchanges 

must allocate on a first-come, firstserved basis.18 The Exchanges 

anticipate that the availability of large 

amounts of power in Hall 5 in several 

intervals may result in the largest Users 

placing early orders for many hundreds 

of kilowatts of power that could 

effectively prevent Users with more 

modest demand from receiving newly 

available power.19

B. Proposed Alternative Power 

Allocation Procedures 

To address these concerns, the 

Exchanges propose to add as Colocation 

Note 8 ‘‘alternative’’ procedures to 

assess power demand and allocate 

power in the Mahwah Data Center in 

certain circumstances.20 Specifically, 

the Exchanges propose that they may 

announce, by customer notice, a 90-day 

window (‘‘Ordering Window’’) during 

which the Exchanges may accept 

unlimited deposit-guaranteed orders 

from Users.21 If they announce an 

Ordering Window while the Cabinet 

and Power Purchasing Limits and/or the 

Cabinet and Combined Waitlist 

provisions are in effect, the terms of the 

Ordering Window would temporarily 

supersede the Cabinet and Power 

Purchasing Limits and/or the Cabinet 

and Combined Waitlist.22

Under the proposal, Users may submit 

orders for their anticipated needs, but 

each User (and its Affiliates) may 

finalize only one order for power during 

the Ordering Window.23 During the 

Ordering Window, the provision of the 

Cabinet and Combined Waitlists in 

Colocation Note 7 that prohibits the 

Exchanges from accepting orders for 

more than four dedicated cabinets and/ 

or 32 kW of power would not apply.24

During the Ordering Window, a User 

may submit an order even if it already 

has an order pending on a Cabinet or 

Combined Waitlist.25 While the 

Ordering Window is open, the 

Exchanges would not accept new orders 

to the Cabinet or Combined Waitlist 

established under Colocation Note 7, 

and any order submitted by a User must 

meet the requirements of the Ordering 

Window procedures as set forth in 

Colocation Note 8.26

Orders submitted during the Ordering 

Window are to be accompanied by a 

deposit equal to two months’ worth of 

the monthly recurring costs of the 

amount of the new power ordered.27

This deposit will be applied to the 

User’s invoices for the first and 

subsequent months after power is 

delivered until the deposit is depleted.28

The Exchanges further propose to 

finalize a User’s order upon receipt of a 

User’s signed order form and deposit, 

and to consider void any orders not 

finalized before the Ordering Window 


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29 Id. The Exchanges state that if User wishes to 

reduce an order that it placed during the Ordering 

Window, the User’s deposit would not be reduced 

or returned, but instead would be applied against 

the User’s first and subsequent months’ invoices 

after the power is delivered until the deposit is 

depleted. Id. at 57152 n.12. 30Notice, supra note 3, at 57152. 31 Id. 32 Id. 33 Id. 34 Id. 

35 Id. 

36 Id. To illustrate, if a User finalized an order for 

100 kW during the Ordering Window and was 

allocated 32 kW of power during step two and no 

further power remained to be allocated after step 2, 

the User’s order would be considered completed. 

The residual 68 kW ordered would not be 

transferred to a waitlist. The User would be free to 

submit a new order for additional power after the 

Ordering Window (subject to the Purchasing Limits, 

if then in effect). Id. at 57152 n.13. 

37Notice, supra note 3, at 57152. 

38 Id. 

39 Id. 

40 Id. To illustrate, if a User finalized an order for 

100 kW during the Ordering Window and was 

allocated a total of 90 kW of power in steps two and 

three, the order would be considered completed. 

The residual 10 kW ordered would not be 

transferred to a waitlist. The User would be free to 

submit a new order for additional power after the 

Ordering Window (subject to the Purchasing Limits, 

if then in effect). Id. at 57152 n.14. 

41See Notice, supra note 3, at 57152, and 

Colocation Notes 6 and 7 in each Exchange’s 

Connectivity Fee Schedule. 

42 In approving this proposed rule change the 

Commission notes that it has considered the 

proposed rule’s impact on efficiency, competition, 

and capital formation. See 15 U.S.C. 78c(f). 

43 15 U.S.C. 78f(b)(5). 

44See text accompanying notes 32–41 supra. 

45See id. 

46 17 CFR 200.30–3(a)(12). 

closes.29 A User may modify its order 

during the Ordering Window, but such 

modification will not be finalized until 

the Exchange receives the User’s signed 

modified order form and any additional 

deposit.30 If the User withdraws its 

order during the Ordering Window, the 

deposit will be returned.31

The Exchanges propose allocation 

procedures for power after the Ordering 

Window ends. To prevent larger Users 

from placing large orders for power and 

preventing allocation of power to Users 

with more modest power needs, the 

Exchanges propose a multi-step 

allocation procedure. In step one, the 

Exchanges will allocate power to fill 

orders in effect on any waitlist in effect 

pursuant to Colocation Note 7 (e.g., the 

current Combined Waitlist).32 In step 

two, the Exchanges will allocate up to 

32 kW of power to each User that 

finalized an order during the Ordering 

Window based on whether sufficient 

power is available.33 If sufficient power 

is available, the Exchanges will allocate 

32 kW of power to each User, except 

that orders for less than 32 kW would 

be filled only up to the number of 

kilowatts actually ordered.34 If 

sufficient power is not available, the 

Exchanges will allocate the available 

power equally among all Users (rounded 

to a whole number of kilowatts), except 

the Exchanges will not allocate a User 

more kilowatts than it actually 

ordered.35 If, after step two, there is no 

power to allocate, all orders finalized 

during the Ordering Window will be 

considered completed.36

If any power remains to be allocated 

after step two, the Exchanges will 

allocate power in step three to any 

orders that were not completely filled 

during step two.37 If sufficient power is 

available, the Exchanges will allocate 

power to completely fill all remaining 

orders finalized during the Ordering 

Window.38 If sufficient power is not 

available to completely fill all such 

orders, the Exchanges will allocate 

power to fill an identical percentage of 

each remaining order (rounded to a 

whole number of kilowatts).39 All such 

orders will then be considered 

complete.40 Further, any orders received 

after the end of the Ordering Window 

will not be included in the Ordering 

Window allocation process but instead 

will be subject to the terms of the 

Cabinet and Purchasing Power Limits 

and the associated waitlists.41

III. Discussion and Commission 

Findings 

After careful review, the Commission 

finds that the proposed rule changes are 

consistent with the requirements of the 

Act and the rules and regulations 

thereunder applicable to a national 

securities exchange.42 In particular, the 

Commission finds that the proposed 

rule changes are consistent with section 

6(b)(5) of the Act,43 which requires that 

the rules of a national securities 

exchange be designed, among other 

things, to prevent fraudulent and 

manipulative acts and practices, to 

promote just and equitable principles of 

trade, to remove impediments to and 

perfect the mechanism of a free and 

open market and a national market 

system and, in general, to protect 

investors and the public interest, and 

not be designed to permit unfair 

discrimination between customers, 

issuers, brokers or dealers. 

The Commission believes that the 

Exchanges’ proposed Ordering Window 

and associated procedures for allocating 

power requested during the Ordering 

Window provide a rational objective 

means for the Exchanges to assess 

power demand by Users prospectively 

and to fairly allocate power requested 

by Users in circumstances where large 

amounts of power become available at 

once (e.g., a new colocation hall opens). 

The Exchanges will allocate power for 

orders received during the Ordering 

Window pursuant to a three step 

process.44 In step one, Users on the 

Combined Waitlist will have their 

orders filled first. In step two, Users 

would be allocated power equally, each 

receiving up to 32 kW of power 

requested during the Ordering Window 

if supply is sufficient (and each 

receiving power equally if power is not 

sufficient), with no User allocated more 

kilowatts than it actually ordered. In 

step three, if any power remains to be 

allocated, the Exchanges will allocate 

power to any orders that were not 

completely filled during step two if 

sufficient power is available (and will 

allocate power to fill an identical 

percentage of each remaining order if 

sufficient power is unavailable). The 

proposed allocation procedures would 

provide that that each User who has 

placed an order for power gets its order 

at least partially filled, and that larger 

Users do not use the Ordering Window 

to prevent power allocation to smaller 

Users with more modest power 

demands. Accordingly, the Commission 

believes that the proposed Ordering 

Window and associated allocation 

procedures are reasonably designed to 

facilitate an equitable allocation of 

available power and are not designed to 

permit unfair discrimination between 

customers, issuers, brokers or dealers. 

For the foregoing reasons, Commission 

finds that the proposals are consistent 

with the Act. 

IV. Conclusion 

It is therefore ordered, pursuant to 

section 19(b)(2) of the Act,45 that the 

proposed rule changes (SR–NYSE– 

2023–29, SR–NYSEAMER–2023–39, 

SR–NYSEArca–2023–53, SR– 

NYSECHX–2023–16, SR–NYSENAT– 

2023–18) be, and hereby are approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.46

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2023–25548 Filed 11–17–23; 8:45 am] 

BILLING CODE 8011–01–P 


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